Protecting Retirement Wealth: A Survey of Australian Products

16 Pages Posted: 18 Jan 2016 Last revised: 1 Apr 2016

See all articles by Anthony Vassallo

Anthony Vassallo

The University of Sydney - Discipline of Finance

Lance A. Fisher

Macquarie University - Department of Economics; Macquarie University, Macquarie Business School

Geoffrey Kingston

Macquarie University

Date Written: March 31, 2016

Abstract

We survey the long-term derivative instruments (warrants) offered by Australian institutions to elderly Australian investors. Our focus is on products other than plain-vanilla life annuities. There are currently four active products. They incorporate a strike price which is either constant or eligible for periodic upward resets. The guarantee terms vary in length from 5 years to the lifetime of a second person. The products typically have hybrid European-American features, as early exercise is typically permissible yet subject to penalties. Benefits are mostly lump-sum but can be income streams. Fees are typically expressed as a percentage of some combination of the initial investment and the current balance.

Suggested Citation

Vassallo, Anthony and Fisher, Lance A. and Kingston, Geoffrey, Protecting Retirement Wealth: A Survey of Australian Products (March 31, 2016). CIFR Paper No. 086/2016, Available at SSRN: https://ssrn.com/abstract=2717135 or http://dx.doi.org/10.2139/ssrn.2717135

Anthony Vassallo

The University of Sydney - Discipline of Finance

P.O. Box H58
Sydney, NSW 2006
Australia

Lance A. Fisher

Macquarie University - Department of Economics ( email )

Sydney NSW 2109
Australia

Macquarie University, Macquarie Business School ( email )

New South Wales 2109
Australia

Geoffrey Kingston (Contact Author)

Macquarie University ( email )

North Ryde
Sydney, New South Wales 2109
Australia

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